Introduction

The Finance Minister has provided one more opportunity to permit the non-filers, stop filers and persons with unaccounted income/investments to pay a moderate tax to declare their untaxed incomes by announcing the Income Declaration Scheme 2016 (the Scheme) through the Finance Bill – 2016 vide Chapter-X (Sections 197 to 208 of the said Bill).

2. The Scheme will come into force from 1st of June, 2016 and shall remain open up to the date to be notified by the Central Government. It is proposed to be made applicable in respect of undisclosed income of any financial year up to 2015-16. The income tax will be charged @30% on the declared income. It will be increased by a surcharge @ 25% of tax payable (to be called the Krishi Kalyan Cess) and a penalty @ 25% of the tax. Thus, the declared income will suffer a tax burden of 45% in aggregate.

Scope

3. Under the Scheme, an errant, desiring to make a declaration, will be able to do so in respect of any income chargeable to tax under the Income-tax Act, 1961 (the Act) for any assessment year prior to the assessment year on the 1st day of April, 2017:

(a) For which he failed to furnish a return under Section 139 of the Act or

(b) He did not disclose the income in his return furnished under the Act before the date of commencement of the Scheme or

(c) Which escaped assessment by reason of the omission or failure on the part of such person to furnish a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise.

Exclusion from the Scheme

4. The Scheme shall not apply in the following cases where:

• Notices have been issued under Sections 142(1) or 143(2) or 148 or 153A or 153C, or

• A search or survey has been conducted and the time for issuance of notice under the relevant provisions of the Act has not expired, or

• Information is received under an agreement with foreign countries regarding such income,

• Cases covered under the Black Money Act, 2015, or

• Persons notified under Section 3 of the Special Court Act, 1992 (Trial of Offences Relating to Transactions in Securities), or

• In relation to prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967 and the Prevention of Corruption Act, 1988.

Immunities including exemption from Wealth-tax

5. The applicant will get immunity from prosecution under Income-tax Act, Wealth-tax Act and the Benami Transaction (Prohibition) Act 1988 subject to certain conditions. The declaration made under the Scheme will also be exempt from wealth-tax in respect of assets specified in the declaration. The declarant will also get immunity from any scrutiny or enquiry of the declaration under the Income-tax Act and Wealth-tax Act.

Procedure

6. The declaration will be made to the Principal Commissioner or the Commissioner of respective jurisdiction and shall be in such form and be verified in such manner as may be prescribed. The person making the declaration in respect of his income or as a representative assessee in respect of income of any other person shall not be entitled to make any other declaration. Detailed procedure will be prescribed in the Rules that are proposed to be made.

7. The tax, surcharge and penalty shall be paid on or before the date to be notified by the Central Government in the Official Gazette. The proof of payment of tax, surcharge and penalty shall be filed with the Principal Commissioner or the Commissioner, as the case may be. The amount of undisclosed income declared shall not be included in the total income of the declarant for any assessment year under the Act, if he makes the payment of tax, surcharge and penalty within the prescribed time. If the declarant fails to pay the total amount payable under the Scheme, the declaration shall be treated as void and nonest. The undisclosed income will then be chargeable to tax in the previous year in which such declaration is made and the normal provisions of the Act will be applicable. The amount paid will not be refunded. The Assessing Officer shall not be entitled, in respect of undisclosed income declared or any amount of tax surcharge paid thereon, to reopen any assessment or re-assessment made under the Income-tax Act or Wealth-tax Act or permit any set off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment.

Declaration Scheme is not amnesty for the errant tax-payers

8. In his Budget speech, the Finance Minister stated that the Income Declaration Scheme to unearth the black money is not an amnesty scheme. This is what he stated in his speech:-

“It is not a VDIS (Voluntary Disclosure of Income Scheme) and it is not an amnesty-inequality arises in amnesty that on a certain income you as an honest taxpayer have paid 30% and you come after 20 years and say that I would also pay 30%. This is not structured that way. You pay 30% tax and 7.5% surcharge and another 7.5% penalty, which is 45% ending up paying 1.5 times more. So you are paying penalties for not paying tax in time”.

9. To conform to the speech of the Finance Minister that it is not an Amnesty Scheme, clause 194 in Chapter-IX of the Finance Bill, 2016 has been provided to make a similar stipulation as stated below:

“For the removal of doubts, it is hereby declared that:

(a) Save as otherwise expressly provided in sub-section (1) of Section 180, nothing contained in this Scheme shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under this Scheme”

10. Although the Finance Minister has stated that it is not an Amnesty Scheme but according to the experts, the Scheme falls squarely within the ambit of definition of “Amnesty” which means granting an official pardon to people who are guilty of an offence. In the Scheme, except collecting 45% by way of tax, surcharge and penalty, the tax evaders have been granted immunity from prosecution, scrutiny and enquiry whereas the honest tax-payers who file their tax returns every year on time, have to face scrutiny and enquiries to verify the correctness of the income declared by them in their returns. The Scheme is also a dampener for those who have received notices seeking explanation on the returns filed by them. According to those experts, this Scheme will shake the confidence of the honest taxpayers in the credibility of the Government to deal with law breakers and invite contempt for its enforcement machinery, namely; the Income-tax Department.

Earlier Voluntary Disclosure Schemes and important judicial decisions

11. Several disclosure schemes have been announced by the Government since 1949, the last one being the Kar Vivad Samadhan Scheme, 1998. The honest taxpayers, either singly or through the associations, have been protesting against the Schemes and claiming them as discriminatory and violative of the equality Article-14 of the Fundamental Articles in our Constitution. It is not necessary to deal with all such writ petitions filed in the various High Courts and the Supreme Court. It will suffice if two writ petitions filed by the All India Federation of Tax Practitioners (AIFTP) are dealt with to bring home the central controversy in relation to such disclosure Schemes.

12. The earlier Amnesty scheme, from 1951 onwards namely Voluntary Disclosure Schemes, National Defence Gold Bonds, Special Bearer Bonds, Indira Vikas Patras etc. failed to collect any significant amount of black money from the tax evaders. The Comptroller and Auditor General (C&AG) in its report dated 14-2-2014 has castigated the Income-tax Department for its woeful administration of prosecution matters. There were substantial delays of 5 to 48 years in the launching of prosecution cases. The half hearted and routine approach of the Income-tax Department to prosecute tax offenders, broken down institution of public prosecuters and a clogged justice delivery system all conspire to ensure that tax evasion pays.

AIFTP v. UOI (1997) 228 ITR 68 (Bom.) and AIFTP v. UOI (1998) 231 ITR 24 (SC)

13. The AIFTP, soon after the Scheme for the Voluntary Disclosure of Income, 1997 was announced, filed a writ petition in the Bombay High Court. Shri Soli E. Dastur, senior Advocate, raised several points including the gross discriminatory treatment meted out to the honest tax-payers. The Court agreed that “the honest tax-payer in the society is at a discount”. However, considering the prevailing and social and economic scenario in the country, it could not be said that the Government was having any other alternative. Dismissing the writ petition by rejecting the contention that the Scheme was discriminatory and will discourage the honest tax-payers to pay their due taxes and wait for such Voluntary Schemes, the Hon’ble Bombay High Court observed that “the honest tax-payer pays his tax not because of inducement but because he believes that it is his duty to the State to pay tax for better living in a civilised society”.

14. The AIFTP did not rest content with the judgment of the Hon’ble Bombay High Court and filed an SLP to the Hon’ble Supreme Court. Taking into consideration the statement of the Attorney General, the Court dismissed the SLP very well argued by Shri Dinesh Vyas, senior Advocate, by upholding the view of the Bombay High Court. The policy statement of the Attorney General is rather instructive as to the Government’s efforts in checking the tax evasion and, can possibly be interpreted to mean that the Government would in future depend upon administrative measures to prevent tax evasion. The five points made by the Attorney General are as under:

“1. After 31st Dec., 1997, the IT Department will considerably step up survey operations under s. 133A of the IT Act, 1961, and search operations under s. 132 of the IT Act, 1961.

2. According to Chapter XIV-B of the IT Act as amended w.e.f. 1st Jan., 1997, if, in the course of a search, undisclosed income is detected, then the assessee is liable to the following:

(i) Tax at the rate of 60 per cent;

(ii) Penalty which can be up to 300 per cent. on the tax evaded;

(iii) Interest under s. 158BFA.

3. In addition, the Finance Minister has announced that in every case of detection of undisclosed income, prosecution will be launched. The relevant provisions are in Chapter XXII of the IT Act.

4. Besides tightening up of legal provisions, the following steps have also been taken:

(i) Acceleration of the process of issuing Permanent Account Number (PAN) ;

(ii) Acceleration of the computerisation of the IT Department ;

(iii) Installation of software to detect assessees who satisfy the criteria laid down under the proviso to s. 139(1) of the IT Act.

5. Government is committed to making a success of the VDIS-97 for fulfilling the objectives set by the Government in the Finance Minister’s Budget Speech. We also wish to emphasise that s. 72 of the VDIS-97 guarantees complete confidentiality in respect of declarations.”

Validity of Kar Vivad Samadhan Scheme, 1998

15. The Government brought another disclosure Scheme soon after the 1997 Scheme. This Scheme was applicable to the assessees who are in arrears of taxes both, direct and indirect taxes, as on 31st March, 1998 but to whom notices were issued after 31st March, 1998. Here also, the Hon’ble Supreme Court in UOI v. Nitdip Textile Processors (P) Ltd (2011) 245 CTR 241 (SC) upheld the constitutionality of the Scheme.

16. From the above discussion, it appears that the constitutionality of the present Income Tax Declaration Scheme, 2016, is not likely to be decided against the Government particularly because, some element of penalty has been included in the Scheme and it is by and large, confined to the class of non-filers and stop-filers and persons against whom there are pending proceedings for assessment/re-assessment or under contemplation.

Conclusion

17. The declarations received and amount declared under the compliance window under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 declaring undisclosed foreign income and assets worth ` 3,770 crore which was later revised to ` 4,147 crore was a considerable disappointment to the present Government. The experts believe that the present Income Declaration Scheme 2016 announced in Budget-2016 is not going to unearth substantial amount out of the huge undisclosed income lying stashed within the country and outside.

APPENDIX – 10

Year	Number of questions of law/cases referred to High Courts	Number of questions / cases where the High Courts upheld the view of the	Percentage of Col. (3) to Col. (2)
1941-50	621	398	64.00
1951-60	1375	778	56.50
1961-70	3268	1989	60.00
1971-80	4826	3127	64.80
1981-90	7546	5048	66.90
1991-2000	8737	5758	65.90
2001-2010	9789	7049	72.01
2011-2015	14483	10891	81.85
	50645	35038	69.18

NOTES:

1. This analysis from 1941-50 to 1991-2000 is based on the cases reported in the Income-Tax Reports (ITRs) and from 2001-10 to 2011-15 is based on the CCH database (maintained by Wolters Kulvers) as representing a sample of the questions of law referred to and decided by the High Courts during the relevant period.

2. If the first two decades (i.e. up to 1951-60), where comparatiely few cases had gone to the High Courts is ignored, thereafter the number of questions of law/cases referred to High Court as well as the percentage of cases where the Tribunal’s view has been upheld, has steadily improved from 60% to 81.85% in the period 2011-15.

3. In so far as the analysis of the judgments of the Supreme Court are concerned, up to the period 1991-2000, the analysis was brough out in the Souvenir published on the occasion of Diamond Jubilee (2001) which is as under:-

“Similar analysis of the judgments of the Supreme Court in Bhargava’s Supreme Court Digest (1982 edition) plus Bhargava’s Yearly Digests of the Years 1983, 1984 and 1985, show that the Supreme Court considered 775 orders of the High Courts in the tax matters during the years 1950 to 1984 respectively; upheld and reversed ‘High Courts’ decisions in 474 and 301 cases. Out of the 301 decisions reversed, 263 cases so reversed, the Supreme Court restored the orders of the Tribunal in 134 cases which gives a percentage of more than 50%. A study of the last decade was conducted from the cases reported to the Income-Tax Reports (ITRs). It showed that during 1991-2000 questions of law were referred to the Supreme Court were 567 and in 384 of the questions so referred, the Tribunal’s view was upheld by the Supreme Court. It gives a percentage of 67.70%. This is exactly 2/3rd “.

4. For the periods 2001-10 and 2011-15, analysis of the judgments of the Supreme Court has been carried out on the basis of CCH database (maintained by Wolters Kulvers). It showed that during 2001-10 questions of law referred to the Supreme Court were 494 and in 329 of such cases, the view of Tribunal was upheld, which gives a percentage of 66.60%. Similarly during 2011-15, questions of law referred to the Supreme Court were 192 and in 132 of such cases, the view of the Tribunal was upheld, which gives a percentage of 68.75%.

[Source : Appendix printed in ITAT Platinum Jubilee Celebration souvenir held on 24th & 25th January, 2016 at New Delhi]

 

1. In the life of any Institution, the jubilees are occasions to sit back and to introspect, to evaluate the achievements and assess the extent to which the objective and purpose with which the Institution was formed, have been realised. This year 2016 presents one such opportunity.

2. This prestigious body, the Income Tax Appellate Tribunal, is a most wonderful gift to our nation from the erstwhile British rulers. Ironically this gift was received just before the time when our ancestors gave them the call to Quit India. The manner in which this new concept for resolution of income-tax disputes was executed in 1941 speaks most eloquently of the vision, ingenuity, dynamism and enterprise of its founders.

3. It was a person of extraordinary qualities, erudition, judicial acumen and administrative abilities who was the founder President. That was the late Justice M. Monir, the first President of the Tribunal in British India. The inaugural team comprised Shri R. P. Varma and Sri Ramamurti as the Judicial Members and Shri A. L. Saigal, Shri P. C. Malhotra and Shri P. N. S. Aiyer as the Accountant Members. Shri Monir later rose to become the first Chief Justice of the Supreme Court of Pakistan. That speaks volumes about the quality and stature of the founding Members. It all started with 3 Benches with none in the South.

4. Appeal procedure as devised was simple with no lengthy pleadings and the prescribed essential data taken in a tabular form. Requirement was simply for concise grounds of appeal to be stated. No rigid rules were put in place for appearances. The Bench ensured a full, fair and courteous hearing. An optimal mix of law and accounts and business practice in the quasi-judicial verdicts was instituted to resolve the tax disputes. The verdict of the Tribunal flowed in quickly and swiftly. Only abstruse questions of law were left for the advisory opinion of the High Courts. On facts, the order of the Tribunal was taken as final.

5. Titans later manned this prestigious body. A brilliant and extant code of conduct was evolved for its Hon’ble Members. Efficient and convenient rules for conduct of the proceedings were devised. Those rules with periodic changes from time-to-time have enabled the Tribunal to glitter over the years. Not just that. The Tribunal has also been conferred the unique privilege of being labelled as a ‘Model’ or a ‘Mother’ Tribunal when similar bodies had to be structured for other disciplines pertaining to excise and customs, sales tax, service matters. One could justifiably say that with God’s Great grace and with the blessings of innumerable well-wishers each President added to the augmentation, enrichment and lustre of the Tribunal. They stood their ground, retained their independence and lived out with great dignity and respect, immune from any outside influences or pressure. The names of former Presidents Late Justice T. D. Sugla, Justice Ranganathan, Shri Ch. G. Krishnamurti, Shri Rajagopala Rao stand out in the history of the last 40 years.

6. Former President Krishnamurthy had, during one of the Jubilees, compiled figures to show that on an average more than 85% of the disputes came to rest at the level of the Tribunal and of those 15% which went for further consideration to higher courts, in them too in more than 85% of the cases, the verdict of the Tribunal was upheld. No judicial body could aspire for a better show of precision and rectitude. It is perhaps with such glittering figures at hand that another former President Dong Zathang startled some judges when at an inaugural function he non-chalantly observed that in the task of delivering justice in tax matters the Tribunal had rendered the indulgence of the higher courts superfluous and unnecessary. Over the years the Tribunal has come to command widespread respect and confidence in public circles. Both the victor and the vanquished have shown abiding faith in its competence, capability, capacity and impartiality.

7. Consistently, and quite at variance with the tiff in other judicial spheres, the Government of the day openly seeks the kind indulgence of the Chief Justice of India to nominate one of his esteemed brother Judges to chair the Selection Panel for nominating Members to the Tribunal. The opinion of the Chairman of the Selection Panel has overwhelming weight and importance. Any person, be it an Advocate or a Chartered Accountant, or be it a Judicial Officer or a Revenue Officer, can apply for selection provided the rudimentary criteria as fixed for the purpose is fulfilled. The Selection Panel also includes the President of the Tribunal and the Law Secretary. The selections have, in many cases, resulted in many a pearls being picked up as Members who later in their life have decorated the Benches of the High Courts and Supreme Court. Others not so endowed are remembered with great respect and high appreciation. The system of selection is so sound and blemishless that it has rarely witnessed any public complaint. Anyone desiring to be nominated to this august body is given a fair and full chance for qualifying.

8. The work regimen for the Hon’ble Members has always been proficiently conceptualised and imaginatively executed.Hierarchical respect inter se Members’ is paramount and all pervading. The Senior Member presides over the Bench and conducts the proceedings. The mix of Advocate and Chartered Accountant or, for that matter, a Judicial Officer and a Tax Administrator has always facilitated an informed, balanced and comprehensive consideration of the points at issue. Proceedings before the Tribunal have always been free of the formal legal strapping. The technicalities of the Evidence Act are seldom invoked. The endeavour in exceptionably is to reach at the substance of the matter. That is the reason for ‘sulabh’ to be one of the two directing principles of this Tribunal. A business like and swift approach rid of procedural hassles with due promptitude in the resolution of disputes is the endeavour of every Bench, be it anywhere, in the length and breadth of this country. Swift justice or ‘satvar nyaya’ has been the other important part of its logo. Strict adherence to the principles of precedence, consistency and principles of general law and basic accountancy and accounting standards have fetched both adulation and respect to the Tribunal.

9. It is well-known that law destroyed destroys and that law protected protects. One could do no better than cite an incident in the CJI’s court concerning the Tribunal in this regard. The then President Rajagopala Rao was in appeal against the Bombay High Court order approving the transfer of the administrative powers of the President to be exercised thereafter as per the Ministry’s directives through its chosen nominee. Just as the hearing commenced for the interim relief as sought by the President, the ASG made certain remarks against the Tribunal’s functioning and cited them as reasons justifying such action by the Ministry. To this the Hon’ble Judges came down on the learned Counsel as if it were with a ton of bricks. Citing personal appearances by him before the Tribunal while at the Bar as the reason for his intimate familiarity with the Tribunal’s procedure and practice and conduct, and the malady as complained of by the Ministry being totally imaginary and uncalled for, he dismissed the ASG’s complaints. Thereafter the then CJI took just no time in ordering a bar on interference in the administrative affairs of the Tribunal and quashed the impugned notification. Certainly this outcome was the result of the Tribunal’s painstaking and unfailing practice over the years of abiding by its ‘Dharma’ in honestly dispensing justice after providing a full and satisfactory hearing to one and all without any discrimination.

10. Over these years many a litigant have knocked at the doors of the Tribunal. Be it a corporate, businessman, politician, trust, foreign enterprise, Government Body or any other entity, all have left securing justice with their hearts filled and mission fulfilled. All that has been due to the easy procedure and the informed and the courteous disposition of the Hon’ble Members. May God Almighty bless this Institution with a grand future which it richly deserves in its sacred role of dispensing quick and easy justice. May it be saddled with greater responsibilities in answering questions of law at the national level, if not for any other reason, then at least for the sake of promoting uniformity and assuring consistency in the administration of tax laws.

[Source : Article printed in ITAT Platinum Jubilee Celebration souvenir held on 24th & 25th January, 2016 at New Delhi]

APPENDIX – 10

Sample analysis showing the result of the review of the orders of the Tribunal by the High Courts during the last 75 years

Year	Number of questions of law/cases referred to High Courts	Number of questions / cases where the High Courts upheld the view of the	Percentage of Col. (3) to Col. (2)
1941-50	621	398	64.00
1951-60	1375	778	56.50
1961-70	3268	1989	60.00
1971-80	4826	3127	64.80
1981-90	7546	5048	66.90
1991-2000	8737	5758	65.90
2001-2010	9789	7049	72.01
2011-2015	14483	10891	81.85
	50645	35038	69.18

NOTES:

1. This analysis from 1941-50 to 1991-2000 is based on the cases reported in the Income-Tax Reports (ITRs) and from 2001-10 to 2011-15 is based on the CCH database (maintained by Wolters Kulvers) as representing a sample of the questions of law referred to and decided by the High Courts during the relevant period.

2. If the first two decades (i.e. up to 1951-60), where comparatiely few cases had gone to the High Courts is ignored, thereafter the number of questions of law/cases referred to High Court as well as the percentage of cases where the Tribunal’s view has been upheld, has steadily improved from 60% to 81.85% in the period 2011-15.

3. In so far as the analysis of the judgments of the Supreme Court are concerned, up to the period 1991-2000, the analysis was brough out in the Souvenir published on the occasion of Diamond Jubilee (2001) which is as under:-

“Similar analysis of the judgments of the Supreme Court in Bhargava’s Supreme Court Digest (1982 edition) plus Bhargava’s Yearly Digests of the Years 1983, 1984 and 1985, show that the Supreme Court considered 775 orders of the High Courts in the tax matters during the years 1950 to 1984 respectively; upheld and reversed ‘High Courts’ decisions in 474 and 301 cases. Out of the 301 decisions reversed, 263 cases so reversed, the Supreme Court restored the orders of the Tribunal in 134 cases which gives a percentage of more than 50%. A study of the last decade was conducted from the cases reported to the Income-Tax Reports (ITRs). It showed that during 1991-2000 questions of law were referred to the Supreme Court were 567 and in 384 of the questions so referred, the Tribunal’s view was upheld by the Supreme Court. It gives a percentage of 67.70%. This is exactly 2/3rd “.

4. For the periods 2001-10 and 2011-15, analysis of the judgments of the Supreme Court has been carried out on the basis of CCH database (maintained by Wolters Kulvers). It showed that during 2001-10 questions of law referred to the Supreme Court were 494 and in 329 of such cases, the view of Tribunal was upheld, which gives a percentage of 66.60%. Similarly during 2011-15, questions of law referred to the Supreme Court were 192 and in 132 of such cases, the view of the Tribunal was upheld, which gives a percentage of 68.75%.

[Source : Appendix printed in ITAT Platinum Jubilee Celebration souvenir held on 24th & 25th January, 2016 at New Delhi]

 

1. The Income Tax Appellate Tribunal is one of the oldest temples of justice in our country and as the saying goes – “the older the temple, the greater is its sanctity and the veneration it commands”. The Tribunal earlier functioned under the control of the Central Board of Revenue till 30-5-1942, subsequently its administrative control was transferred to the Legislative Department of the Government, which is now the Ministry of Law.

In the year 1940-41, the Income-tax Appellate Tribunal had only 3 Benches functioning at Mumbai, Delhi and Madras. Considering the need of the taxpayers and with the intention to render quick justice at the doorstep of the taxpayers, the Government sanctioned 63 Benches functioning from 24 cities. This proves that no other Tribunal in India has won such well deserved respect and confidence of the taxpayers.

2. The Tribunal is a final fact finding authority under the tax law. An appeal against an order of the Tribunal can be filed to the High Court only on substantial question of law. It is a matter of record that 85% of the appeals decided by the Tribunal are accepted by the assessees and department. Only 15% of the appeals come for consideration before the High Courts. Out of the matters which come for consideration before the High Courts by way of appeal, 65% of the questions of law are accepted by the High Courts as rightly decided by the Tribunal. It is only in the remaining 35% of the matters that questions of law are admitted by the High Court. This proves beyond reasonable doubt that both the assessees and the Revenue have tremendous confidence in the justice delivery system of the Tribunal.

3. Everyone concerned with it, admires the punctuality over the years in the functioning of the Tribunal. The Tribunal starts sharp at 10.30 AM not only in Mumbai but in the rest of the country, where its Benches are functioning. In response, the members of the Bar also reciprocate by extending their co-operation with the preparedness and discipline in presenting their cases.

It is therefore no wonder, that as on date, the Income–tax Appellate Tribunal is considered as one of the finest institutions of our country. This has been possible due to the collective efforts of the Honourable Members of the Tribunal and the Tax Bar.

4. The Members of ITAT are appointed by a process of interview by a Senior Judge of the Supreme Court, who is the Chairman of the Interview Committee. There is no second thought that the process of appointment of Members should not only be transparent and impartial, but most importantly free from executive interference; and exactly this purpose is achieved by the Interview Committee.

In the year 1995, there was a move to shift the Headquarters of the ITAT from Mumbai to Delhi. The ITAT Bar Association, Mumbai strongly objected to this move. This move was successful by timely intervention by the then Leader of Opposition in the Lok Sabha, Shri Atal Bihari Vajapayee, who in his letter dated 12-5-1995 stated thus: “….It will therefore be in the fitness of things if the Institution is allowed to continue in Bombay itself. As you might be aware, the Government’s policy is to shift more and more offices outside Delhi to remove congestion in the capital. Thus the shifting of this office to Delhi would be contrary to Government’s policy”. I am proud to say that the then Government accepted our representation and move to shift the Headquarters at Delhi was dropped.

I had the good fortune of experiencing the Bar Associations supporting the Tribunal in ensuring that it works with independence and without fear of interference. In the year 1996, when Honourable Shri T. V. Rajagopala Rao was President of the ITAT, there was a move by the Executive to involve the Law Secretary in the process of transfer of the Members. Such an action was a clear interference with the judicial independence of the Tribunal and resentful. The ITAT Bar Association of Mumbai approached the Bombay High Court, which has stayed this interference of the Executive [Income-tax Appellate Tribunal Bar Association v. UOI (WP No 2350 of 1996) (Income Tax Review April 2007 – Pgs. 1to 3)]. It was encouraging to see the Apex Court affirming this decision of the High Court in Ajay Gandhi v. B. Singh (2004) 265 ITR 451 (SC). In ITAT v. V.K. Agarwal (1999) 235 ITR 175(SC), the Apex Court, in a clear “no nonsense please” words held that any interference in the judicial functioning of the ITAT will lead to contempt proceedings.

In the year 1999, when additional five Benches were sanctioned to Mumbai there was constraint of the office space to accommodate additional five Benches in the same premises, where the present Benches were functioning. Hence, there was move to have five additional Benches at New Mumbai. Here, again the ITAT Bar Association approached the High Court of Bombay, due to which the additional five Benches are allowed to function in same premises. I recollect the inauguration of these new Benches by the then Law Minister, Honourable Mr. Arun Jaitley on 16-2-2001. This move helped not only the tax payers of Maharashtra, but also the tax administration and the Tribunal.

5. The Income-tax Act, 1961 is the only Central Act, which refers to 92 other Central Acts. In addition to this, income tax rules, notifications, circulars and amendments are recurring features as may be seen every year. Hence, the Income-tax Act is considered as one of the most complex laws of our country. The Members of the Tribunal, while deciding tax matters, get opportunity to study and consider all these Acts and also various State Acts. During their tenure, the Members of the Tribunal deliver a number of judgments and all these judgments are published in the electronic media. From the reported cases one can vouch that in the field of Transfer Pricing and International Taxation, the ITAT has immensely contributed to the development of International tax jurisprudence. By and large, the judgments of the ITAT have been approved by the High Courts and Apex Court.

It is with pride that in international conferences, the judgments of the ITAT are discussed at length for the precedent values it creates. Let me acknowledge that when the Asia-Oceania Tax Consultants Associations (AOTCA) International Tax conference was held in Mumbai from 19 to 21 November 2009, representatives from more than 14 countries visited the ITAT Benches at Mumbai to watch its proceedings. After witnessing the proceedings, they highly appreciated the process of justice delivery system adopted by the ITAT. I am happy to state that some of International professional Organisations have even made representations to their respective governments to adopt the Indian ITAT model for settling the tax disputes.

One can therefore easily judge the in-depth knowledge of Members by reading the qualitative orders passed by them. Their integrity can also be vouched for by the Tax Bar and the Revenue which represents the matters before the Tribunal.

With this experience and skill, the Tribunal Members, whose integrity is beyond any reasonable doubt, deserve to the elevated as High Court Judges after a reasonable exposure of 5 years or more on the Bench. In my long stint with the Tribunal, I have seen how the Members, by their sheer potential and rich experience, climbed the ladder of success by being elevated as the Judges of High Courts and also of the Supreme Court.

It is in this background, pursuant to the judgment of the Supreme Court, in Supreme Court Advocates–on–Record Association v. UOI striking down the National Judicial Appointment Commission Act and upholding the collegium system of appointments and judges, invited suggestions from all stakeholders on the measures to be taken to improve the collegium system. The All India Federation of Tax Practitioners (AIFTP) has filed a petition before the Apex Court urging the Constitutional Bench to consider the Members of the Tribunal as one of the most potential sources for elevation to High Courts.

I would be personally very happy, if this representation is implemented. This will be a good reward for the Tribunal for its ‘Platinum Services’ – to see its Members are recognised for elevation as High Court judges.

6. Watching the Tribunal, I feel saddened to see its Members working under service conditions, incommensurate with importance of the judicial positions they occupy. In this regard, much needs to be done urgently to reward their efficiency and hardwork.

For example, the salary rank given by the Seventh Pay Commission to Principal Chief Commissioners of Income-tax is glaringly higher than that of the Members of the Tribunal, though the orders of the Principal Chief Commissioner may be subject matter of appeal before the ITAT. This obviously appears to be a bona fide mistake on the part of Seventh Pay Commission. I hope the same will be rectified at the earliest.

7. The wisdom of the Tribunal Members should be seen as the intellectual property of the nation. I recollect that at the Members’ conference held in Mumbai on 4th November, 2006, the then Law Minister Honourable Mr. H. R. Bhardwaj had assured that the Government will increase the age limit of all the Members from the present 62 years to 65 years. This has however till date not seen the light of the day. The AIFTP has, once again, therefore made representation to increase the age limit of all Members from 62 years to 65 years.

8. As an admirer of the Tribunal, I foresee sweeping changes in the Tribunal’s justice delivery system with progressive technological upgradation. The Tribunal introduced the Concept of e-Court in the year 2012. When it will be fully developed, all Benches across the country will be linked to the Head Office at Mumbai which may facilitate quick disposal of matters.

9. One cannot forget the contribution of the ITAT for the development of Tax Bar. The “Nani Palkhivala Memorial National Tax Moot Court competition” was initiated by the Bar in the year 2004. For more than a decade, the ITAT has been providing the facilities of the Court rooms and its Members have also whole heartedly participated in the competitions – by guiding the law students who take part in the competition from different corners of our country.

10. On the Bar’s side, there was always a responsibility on it to support the Tribunal in preserving the purity and integrity of the institution. Looking back in the history, we can say with pride and confidence on the eve of ITAT’s platinum anniversary that the Bar has abundantly contributed to the development of this Mother Tribunal in this regard.

Let us work hand-in-hand and see that the Tribunal continues to retain its glory as one of the finest institutions in this country and as a model for other institutions to follow in India and rest of the world. On the whole, I feel upbeat and optimistic of a bright future for the Tribunal in the coming years!

My best wishes and warmest regards to the Hon’ble President and to the Hon’ble Members on this memorable occasion of the Platinum Jubilee of the ITAT.

Jai Hind.

[Source : Article printed in ITAT Platinum Jubilee Celebration souvenir held on 24th & 25th January, 2016 at New Delhi]

The Income Tax Appellate Tribunal was set up on 25th January, 1941 as an independent quasi-judicial body to hear Second Appeals under the Income-tax and Wealth Tax Act. The Tribunal was constituted with three Benches with its headquarters at Bombay now Mumbai. With the increase in litigation and in accordance with the motto “Sulabh Nyay Satvar Nyay” Benches increased to 63. Criteria for its working is ‘(i) Cost effective; (ii) Accessibility; (iii) Freedom from technicalities; (iv) Expedition; and (v) An expert knowledge of the subject.’

Levy and collection of tax on the principles enshrined under Article 265 of the Constitution of India, in the largest Democracy of the work, is a formidable task. The Assessing Authority, prefers to frame high pitched assessment. The First Appellate Authority prefers to uphold the view expressed by the Assessing Authority. Lis starts at the level of the Second Appeal before the Tribunal. The Appellate Tribunal shall consist of a Judicial Member and an Accountant Member. It provides healthy atmosphere to interact and co-exist.

Strict norms have been laid down for selection, promotion and elevation. One must be of high integrity, honesty and required to have a moral vigour, ethical firmness and impervious to corrupt or venial influences. One should be competent enough to keep most exacting standards of propriety in Judicial conduct. Well defined strict procedure has been evolved so that right person, at right time, in right manner enters the Tribunal. In ‘Shukraneetisar’ the great jurist Shukra says “The judges appointed by the King should be well-versed in procedure, be wise, of good character and temperament, soft in words, impartial to friend or foe, truthful, learned in law, active (not lazy) free from anger, greed or desire (for personal gain)”. Function of a judicial authority is a divine function. The greatest strength is the faith and trust of the citizens. It should not be shaken and one should not be under cloud.

Over years it has applause from the judiciary, taxpayers and the tax department. So much so that it is called as a “model” or “mother” Tribunal. The Appellate Tribunal is final fact finding authority. Its finding on facts is final and no appeal lies to the Hon’ble High Court, except on substantial question of law. The powers are very wide but there is no power of enhancement. All questions, whether of law or a fact which relate to the assessment of an assessee may be raised before the Tribunal. The powers include the power to annul an assessment order or set aside or remand. The powers have been expressed in the widest possible terms. It has power to grant stay and rectify its own order, with no right to review.

Its functioning has been applauded by the Supreme Court and those who matter. Smt. Indira Gandhi, iron lady and most powerful Prime Minister in 1981, stated: “The Income Tax Appellate Tribunal with its branches spread all over the country has an important role. It has to preserve the interests of revenues to the State, to prevent harassment to the taxpayers and to render better service and quicker justice to the citizen and the State alike”. Illustrious former Prime Minister, Shri Rajiv Gandhi appreciated on 4-3-1985 “Over the years, tax laws have grown in complexity and with it has grown the need for fair and dispassionate interpretation of the laws. The Income Tax Appellate Tribunal has made a useful contribution in this field.” Hon’ble Mr. Justice Y. V. Chandrachud, Former Chief Justice of India on July 15, 1981 observed – ‘The Income Tax Appellate Tribunal is a model administrative Tribunal whose illustrious example and commendable performance may well be emulated by similar other Tribunals in different disciplines. There is uniform praise of the manner in which the Tribunal functions and I suppose it is one of the few quasi-legal institutions which is not plagued by the problem of arrears.” Its decisions are analytical thrashing out the facts and the law and many landmark orders have been passed. Above 90% whereof are approved by the Apex Court. Its decisions are referred to and respected outside India as well.

With vast experience of 10-15 years, the Accountant Member have to satisfy with attaining age of superannuation at 62. However the Judicial Members deserve to be elevated as Hon’ble Judges of the High Courts. Hon’ble Mr. Justice Ranganathan, former President adorned the high office of honourable judge of the Apex Court, whereas Justice T. D. Sugla, Justice R. V. Easwar and many other judicial members have been elevated to the High Courts and have proved as an asset in tax benches. It is highly desirable that competent members of integrity are elevated in the High Courts, sit in tax benches and dispose of tax matters expeditiously, accurately and with strength. Age also deserves to be enhanced to 65, looking to the lifespan these years.

I have pleasure and privilege of appearance before the prestigeous institution since 1954 in Delhi benches, which were functioning in barracks. I have appeared in fairly large number of benches all over the Country. I cherished the appearance and the atmosphere as Shri N. A. Palkhivala, doyen of our profession, use to enjoy appearance. Members used to be courteous, humorous and used to treat with smile at the same level. We used to live like a Joint Hindu Family, respecting and loving each other and learning from and teaching to one another. Mr. Sehgal, a senior Judicial Member of I.T.A.T., Delhi Benches, when I stood up to argue on application for rectification in 1977 stated : “Mr. Ranka, on Friday we sit to hear about our mistakes and try to understand view point of both the sides in a critical manner”. In recent years the members do not appreciate filing of Rectification Applications and try to reject in a mechanical manner. There had been a sea change in the attitude of the members of a prestigeous institution of ITAT.

The Hon’ble Members are expected to be just fair, reasonable and to give fair opportunity for hearing to both the sides, and write detailed, well nit, reasoned, speaking orders, considering the facts and judicial precedents. Atmosphere should be congenial and younger generation needs encouragement.

Time has come when we have to bring back the old glory by strengthening the co-ordination and harmonisation between the Bar and the Bench and perform the divine act of delivering justice with the help of harnessing our extraordinary ability by adopting and practicing in day-to-day life the attributes possessed in our judicial heritage and culture. I have all the hopes that the I.T.A.T., shall be a better arbiter of justice, without technicalities and with expedition, to have a great impact on the erring tax authorities. My best wishes and congratulations on the Platinum Jubilee Celebrations.

[Source : Article printed in ITAT Platinum Jubilee Celebration souvenir held on 24th & 25th January, 2016 at New Delhi]

On 25th January 2016, we celebrate the Platinum Jubilee of an institution, the founding day of which precedes the founding day of the Indian Republic by 9 years and 1 day. Like the Indian Republic the lifetime of the Tribunal will be forever or at least till income-tax continues to be levied, which as per the present reckoning will, unfortunately, be forever!

I am sure this publication will be full of (deserved) praise for the Tribunal. However, a birthday is not only an occasion for celebration and congratulations but for stock-taking and reflection. It is axiomatic that no institution is perfect because institutions are manned by human beings, even though they render justice which is an attribute of God.

One sincerely hopes that the Central Government will in future fill up vacancies in the membership of the Tribunal promptly. Out of a sanctioned strength of 126 members, even after taking into account the recent appointment of about 30 members, the Tribunal is functioning at three-fourths of its sanctioned strength. It is known in advance as to when a vacancy will occur and appointments can well be made in good time to fill such vacancies. As per newspaper reports the Supreme Court also has had occasion to comment on the lethargy displayed by the Central Government. We should be able to tell the world not only that “we make” in India but also that we make appointments to posts on time in India! Delay in appointments means that Benches are made to function in double shifts and even in triple shifts! At some centres there is an imbalance between the number of accountant and judicial members with the result that the same member has to sit on two or three Benches on a daily basis! Such burden cast on the members achieves little, as very often a large number of the excessive matters fixed for hearing on a day are adjourned for want of time and this results in wastage of time for the litigants and their representatives. The cynic may of course say that with the ever increasing limit of tax at stake, only beyond which the Department can file an appeal one may not require the full strength of 126 members for disposal of the appeals!

On a few occasions there have been somewhat perturbing reports of allegations of impropriety by a Tribunal member. It is desirable that a Committee should be set-up which would expeditiously look into reports, which appear to have a prima facie basis, and submit its findings to the President. The committee could consist of the Senior Vice-President and another member functioning at the headquarters of the Tribunal and one member functioning at the place where the member against whom an allegation is made is based. If it is found that the conduct of a member has not been what it should have been, appropriate action should be taken at an early date. Transferring the member to another location is not a solution. If the existing rules do not contain adequate provisions conferring appropriate powers in this behalf an amendment thereof may have to be considered. If necessary, the President may be vested with wider powers in this behalf.

An event worth mentioning, which occurred after the diamond jubilee celebrations, was the formulation by the Tribunal in 2008 of a Code of Ethics for its members. In 2000 several professional associations had submitted to the President a very comprehensive draft in this behalf.

Presently, to obtain a stay in respect of a demand raised pursuant to an assessment order, an assessee has to apply to the Assessing Officer and thereafter, if necessary, to the Commissioner. In practice this procedure has not been effective as the pressure to collect taxes to meet targets is ever present. This results in writ petitions having to be filed in the High Court to obtain relief. It is for consideration whether on the rejection of an application for stay of recovery of tax, whilst an appeal is pending before the first Appellate Authority, the Tribunal should be empowered to entertain an application for stay of recovery of taxes.

After the celebration of the diamond jubilee in 2001, two important organizational changes have taken place. The first is the insertion in the Income-tax Act of section 144C in 2009 regarding the constitution of the Dispute Resolution Panel. Generally, the Panel affirms the draft assessment orders except for correcting some very obvious errors. Assessees still approach it primarily because it enables early access to the Tribunal as, unlike in the case of an appeal to the Commissioner, a time limit if provided for disposal of matters by the Panel. This is indeed a tribute to the confidence reposed in the Tribunal as the institution which will deliver even-handed justice.

The other change is the insertion in 2013 of clause (a) in section 252(3) of the Income-tax Act empowering the Central Government to appoint a sitting or retired judge of a High Court as the President. Prior thereto the senior vice-president was normally appointed as President. This ensured that the appointee had prior experience of the Tribunal’s working and knowledge about the members who he had to regulate. Whether this system, which had worked satisfactorily, should be continued is a matter for careful consideration after taking into account the views of all concerned and the experience of the last nine months, when the first appointment as per section 252(3)(a) was made.

The biblical life span of an individual is three score and ten years. At 75 the Tribunal is not old but an Institution with unmatched experience of 75 years. I am sure the celebration in Delhi of the Platinum Jubilee of an Institution, the headquarters of which and of its President are in Mumbai, will be a glittering success. One looks forward to the celebration of the centenary. I do not know whether there is a generally accepted occasion like a silver, golden, diamond or platinum jubilee between the platinum jubilee and the centenary!

[Source : Article printed in ITAT Platinum Jubilee Celebration souvenir held on 24th & 25th January, 2016 at New Delhi]

Established in 1941 as a quasi-judicial tribunal to adjudicate on tax disputes, the Tribunal was, to my mind, discharging its functions to the satisfaction of one and all. But there was a section of people who were not happy that judicial functions should be entrusted to bodies other than 'regular' courts of law. This opinion found a champion in the then Finance Minister of India who declared, at a conference convened, coincidentally, within a few days of my having joined the Tribunal, in no uncertain terms, that the Tribunal should be abolished. But the Tribunal had its strong votaries, the eminent lawyer Shri N. A. Palkhivala and Senior Advocate and sometime Law Minister Shri Ashok Sen among them, and at its Silver Jubilee Celebrations a couple of years later, the Tribunal received such universal acclaim that it not only survived the threat to its existence but so entrenched itself in public opinion as to be able to chart a glorious career for itself and complete its Fortieth year, then its Golden and, presently, its Platinum, Jubilee. Not only did this Tribunal make a good name for itself, it also became a precedent for the establishment of other Tribunals, based on like model, which are doing good work till the present day. This is indeed a great achievement. The Tribunal found natural expansion as a Direct Taxes Appellate Tribunal with the enactments of other Direct Laws but though some of them have since been repealed, its potentiality to accommodate itself to extended jurisdiction in the future cannot be ruled out.

My tenure of 14 years on the Tribunal was a very happy period. We, the members of the Tribunal, derived great personal satisfaction from the discharge of our functions dispensing justice to the best of our ability. We were completely insulated from the tax department and there was no kind of interference from any branch of the administration in our judicial functioning. We functioned, in places where there was more than one Bench, as a cordial team – more or less like members of a family – and developed mutual regard and esteem for one other. I recall with pleasure the lunch meets that we used to have in Calcutta in the 1960s and in Delhi in the 1970s and I am sure a similar spirit of bonhomie prevailed in other places as well. Dissenting opinions were there no doubt but these were incidental to the nature of our duties and created no ill
will. It was truly the happiest time of my life.

The vast expansion in the number of benches of the Tribunal and of the institutions before it over the years no doubt speak of its need as well as its great popularity. But, more than numbers, it is the quality of the output (now running into several tomes of legal journals every year) that is the true measure of its contribution to tax jurisprudence. Interpretations of tax legislation with the frequency of its amendments and the complexity of the problems it posed was always difficult enough. The economic prosperity of India and the expansion of its commerce, the vast increase in global trade with interaction of different currencies, the evolution of innovative transactions in international trade and increasing resort to the internet, e-mail and transactions on the electronic media have exposed the Tribunal to new vistas of knowledge and the evolution of new legal concepts. The Tribunal has successfully attempted not only to match the speed of its disposals to the pace of the institutions but also risen to meet the fresh challenges.

In the life of an institution, decades are but a small measure and I wish this unique institution all success in its future progress and, within the winking of the eye, we shall see the Tribunal reaching its Centenary year as popular and welcome as before.

[Source : Article printed in ITAT Platinum Jubilee Celebration souvenir held on 24th & 25th January, 2016 at New Delhi]

My beloved fellow members in AIFTP family and all other brothers and sisters in profession.

It is a matter of immense bliss to come before you all, so fast to greet everyone in AIFTP family and to find you happy, cheerful and healthy mood.

I would like to seize this opportunity to state here that the wheels of AIFTP chariot are continuously and incessantly moving forward on its well built track to reach everyone in the nook and corner of the country and it may not be an insignificant aspect that could be brushed aside or omitted to be stated that the chariot would move further only with the powerful, strong and active horses – to mean here that the most active, dedication and enthusiastic members.

We have returned only few days back carrying ever recollectable memories of the two day National Tax Conference on 12th & 13th March 2016, at Nashik organised by West Zone of AIFTP in collaboration with other partnering local Bar associations. Every participation in a seminar, symposium or conference of AIFTP is a lifelong remembering experience. A very good present time involving mindboggling technical sessions handled by reputed and well- experienced professional faculty had taken everyone to the optimum benefit of the participants.

A well meaningful and purposeful deliberations had taken place on 12-3-2016 in the NEC meeting and the same was also well-attended. Suggestions in relation to the Finance Bill for 2016-17 as mooted out by the members of the Direct Taxes and Indirect Taxes representation committees of AIFTP viewed in right perception are reduced into writing and respective representations are being submitted to the Ministry of Finance, Government of India. We have also received suggestions in the NEC meting from some of our respected members touching upon the life and survival of the AIFTP journal, when in respect of new life members to ensure certainty in subscription to the journal, life time subscription to journal, as also mooted out. To say that new members along with life membership admission fee, if chosen to pay, the amount of life time subscription to be determined by the journal committee, the journal to such members paying life-time subscription would be ensured in the library of such members. Though the suggestion appears to be appreciative to some extent, the technical intricacies are to be examined, so as to say that the journal shall be able to meet the working costs for at least a period of 3 to 4 decades, notwithstanding the fact that there would be upward revision in the landing cost of each copy of the journal. However the Chairman of the Journal Committee Mr. Mitesh Kotecha has been requested to examine this issue in all aspects and inform the office bearers for their examination and decision in the ensuing meeting at Mumbai in the 2nd week of April.

Friends, Journal as I have already stated, has been continuously ranked by the past National Presidents as the voice of the AIFTP in respect of ethics, education and excellence in professional standards amongst the members and as such it has to receive its due encouragement and support in all respects.

It has been our only endeavour that every member of the Federation shall keep the Journal in his library without fail by invariable subscription to the journal. Members may kindly appreciate that the journal gives us continuous education and knowledge that would ultimately enhance our knowhow to become oneself competently competitive to serve the clientele in an era of changing laws in tune with the needs of today’s society in the world. Therefore let us all join together, come together, work together, aspire together and serve together by helping the journal to fly to reach everyone of us.

Friends so much is in my mind and pen to say and speak. Unfortunately my voice does not know its limits when it looks at, of and for.

Hoping to converse with you all in my next talk.

 ||Jai Hind ||

Dr. M. V. K. Moorthy
National President

Finance Bill, 2016 – (2016) 381 ITR (St.) 9 – Amnesty scheme to tax defaulters – A premium for dishonesty – Honest tax payers pay tax every year whereas dishonest tax-payers pay tax once in five years

In the history of taxation in India from 1951 to 2016, various Governments have introduced more than 15 Amnesty Schemes in direct taxes. Honest tax-payers believe that they pay the taxes every year whereas tax evaders pay taxes once in five years. If an honest tax payer commits a simple error he is made liable to pay interest, penalty and in some cases, even prosecution has been initiated, whereas dishonest tax-payers are immune from prosecutions by paying simply 45%. The Govt collects more than 90% of taxes by way of advance taxes and tax deducted at source. When the tax deduction at source provision was introduced, only three sections were covered, whereas now, the assessee has to deduct tax at source under more than 26 sections. Income-tax law being very complicated, there is no clarity in a number of provisions including the rate of tax to be applied. If there is a mistake, even though bona fide, all consequences follow, including the disallowance of expenses. This is the reward that honest tax-payers are getting for doing the work of the Government by collecting the taxes and depositing to Government Treasury.

The Amnesty Scheme rechristened as Compliance Window providing an opportunity to defaulting tax-payers to come clean and pay taxes is another such example. In my view, this scheme will prove to be a disincentive to honest tax-payers who have paid taxes honestly. Constitutional validity of Voluntary Disclosure of Income, Scheme, 1997 was challenged by the Federation. However, the Apex Court has upheld the Constitutional validity of the scheme [All India
Federation of Tax Practitioners v. UOI (1998) 231 ITR 24 (SC)]. It is worth considering whether the Federation should knock the doors of the Judiciary once again in the interest of honest taxpayers.

Another budget proposal to levy tax on senior advocates may result in practical difficulties. Firstly, the issue of levy of service tax on advocates is sub judice before the Hon’ble Supreme Court. The Supreme Court (SLA No. 13944/2015 dated 10-8- 2015) has stayed the operation of the Bombay High Court order upholding the levy of service tax on advocates. Therefore, in my view, the introduction of this provision is ill-timed and may result in further challenge to the provision before various High Courts. National President of the AIFTP Dr. M.V.K. Moorthy on behalf of the AIFTP is proposing to file the PIL before AP High Court and there is move to file petition by eminent senior Advocates from Ahmedabad.

Another provision which could see challenge before higher Courts is the taxability of dividends in excess of
Rs. 10 lakh. This would not only result in double taxation (since the company declaring dividend would be liable to pay DDT) but could also be held to be violative of Article 14 of the Constitution of India.

The total overhauling of the penalty provisions may result in increased litigation in the years to come.

Some of the amendments which require to be appreciated are

– Presumptive scheme of taxation for professionals;

– Interests on delayed refunds @ 9%;

– Stay of recovery by paying 15% of the disputed tax;

– Amendment to one of the most litigious provision of Rule 8D;

– Tax exemptions for eligible start-ups;

– Introduction of Direct Tax Dispute Resolution Scheme, 2016.

– Increasing the limit of single member from
Rs. 15 lakh to Rs. 50 lakh.

As tax practitioners, whenever good provisions are introduced, we must appreciate them and when there are retrograde provisions, we must make representations and even move the judiciary, if need be.

In this publication various authors have analysed the important provisions of the Finance Bill 2016, which will help the readers to understand the various complicated issues.

One must also appreciate that this year the Chamber of Tax Consultants, Mumbai has brought out an e-publication on Finance Bill, 2016. Readers may visit www.itatonline.org and share their views. One can also listen to the speech of eminent Sr. Advocate, Shri S. E. Dastur on the Finance Bill, 2016 on
www.itatonline.org.

Dr. K. Shivaram
Editor-in-Chief